CUC, Gov’t at square one

Caribbean Utilities Company will prepare a new proposal for its licence renewal after meeting with the Cabinet earlier this week.

Speaking in the Legislative Assembly Wednesday, Leader of Government Business Kurt Tibbetts indicated CUC would start from scratch with the proposal.

‘They have gone back with a view of reworking all that has been done thus far,’ he said. ‘They understand… the government desires a noticeable decrease in rates to the consumer.’

Richard Hew, president and chief executive officer of CUC said Tuesday’s meeting with Cabinet went well.

‘We had reached an impasse with the proposal we submitted to the Government’s negotiating team. However, we had a productive meeting with Cabinet on Tuesday, 15th May and CUC has agreed to revisit the proposal and provide continued reliable service at the least cost to our customers,’ Mr. Hew said. ‘We are expected to submit the new proposal to the Government by the end of June and we are hopeful that we can meet the objectives of both sides and complete the negotiations by this summer.’

CUC and the government began this round of licence renewal negotiations in November 2005, but an agreement has not been reached.

In March, Minister of Works Arden McLean said he set a three-month deadline for the conclusion of the negotiations, but that looks like it will not happen because of the new focus to reduce electrical costs to the consumer.

‘What I can assure the public is that length of time it has taken so far… it will not take that time and more to expect a resolution,’ Mr. Tibbetts said, adding that he expects the resolution within 90 days.

‘We wait to see what the new proposal will be from Caribbean Utilities. They understand very clearly what we are trying to achieve.’

Mr. Tibbetts said the government asked CUC to give what it could to reduce rates, but that it understood CUC had to remain viable.

There are some ways government can assist in bringing the rates down.

For instance, Mr. Tibbetts pointed out that CUC has to bear all the risk on some of its uninsurable infrastructure.

Much of its transmission and distribution system, like poles and lines, are uninsurable because of the high risk of damage during a hurricane.

‘If government can look at some of the risks involved, [it] could assist in bringing… rates down,’ Mr. Tibbetts said.

Another place government could possibly help is with the 50-cents-per-gallon import duty it charges CUC.

Mr. Tibbetts said the rate is already one of the lowest fuel tariffs in the region.

‘But we also understand it has a direct bearing on the cost [of electricity] to the consumer, and we understand it’s as much as 15 per cent.’

CUC pays government about CI$15 million per year in import duty, Mr. Tibbetts said.

‘We can’t just create a $15 million vacuum,’ he said, adding that if revenue went down, Government would have to reduce expenditure somewhere.

‘Government is looking in these areas to see best how to deal with it,’ he said.